Tax Filing Requirements for Children

Review

The IRS requires that all taxpayers file a tax return, regardless of age.

The Internal Revenue Service requires all taxpayers, regardless of age, to file a tax return and pay the suitable income tax in any year their gross income exceeds certain levels. This necessity stretches out to the children you claim as dependents. On the other hand, not at all like grown-up taxpayers, children have more adaptability in picking how to go along.

Dependent children

Your indigent child must submit tax returns if they acquire certain measures of wage within the year. Distinctive recording principles apply to children and even little amount of income may require a return.

You must guarantee that your child is eligible to be your dependent; generally, their commitment to file a tax return is the same as grown-ups. The tax rules allow you to claim a reliance exception for a child if they dwell with you for more than a large portion of the year, don’t give more than half of their own financial support, and are less than 19 years old at all  times during the tax year, or under 24 if a full-time student.

Your child’s earned income

Dissimilar the other taxpayer, the IRS treats your child differently relying upon whether they earn money from work or through investment. Every single children who gain more than $6,300 of income in 2015 must file an individual income tax return and may owe tax to the IRS. Earned income just applies to wages and pay rates your child gets as a consequence of giving services to a business, even if only through a part-time job.

In any case, regardless of the possibility that your kid earn s not exactly $6,300 amid 2015, it might be a smart thought to document an expense form for them, on the grounds that they could be qualified for an assessment discount. Notwithstanding the measure of salary your youngster wins, their standard finding is not the same as yours. It can never surpass the bigger of $1,050 or their earned salary in addition to $350, with the most extreme equivalent to $6,300.

Your child’s investment income

The rules change when your child gets pay from sources other than job, for example, hobby and dividend payment. At the point when the annual total of this kind of salary exceed $1,050, then a return must be filed for your child.

If your kid’s unearned income just comprises of interest and dividends, then you can choose to incorporate it all alone return and join it with your income. Do this by finishing IRS Form 8814 and attaching it to your personal tax return.

Nonetheless, depending upon the level of your pay, making this race may bring about higher income tax than if you set up a different return for your child. This is because it could push you into a higher tax bracket, where higher tax rates may apply. If you decide to choose to set up a different return for your kid, the same decreased standard deduction rules detailed above will apply.

For more information on myTax 2019, online tax return 2019, myGov 2019, Tax Return 2019 , or any other tax related matter, please call our professional accountant on 1300 768 284 . For more information please contact us at 1300768284 or you can email us atenquiry@taxrefundonspot.com.au

How Much Tax Should Be Taken From My Pay?

Why is tax taken from your pay?

Payers, such as employers, are required to withhold tax from the payments they make to you and send those payments to us regularly. When you lodge your tax return at the end of the financial year, you will be entitled to a credit for the amount of tax that has been withheld from your pay. This amount is shown on your payment summary.

Your payer works out how much tax to withhold based on information you provide in your Tax file number declaration and Withholding declaration

Withholding rates are calculated on the basis that, if your pay and circumstances remain consistent throughout the year, you may be entitled to a small refund when you complete your tax return at the end of the financial year.

This system is called pay as you go (PAYG) withholding.

Tax withheld calculator

A simple way of working out how much tax should be withheld from your pay is to use the Tax withheld calculator. This takes into account:

  • whether you are a resident or non-resident
  • Medicare levy exemptions or reductions
  • tax offsets
  • amounts you may be required to repay under the Higher Education Loan Program (HELP) or the Student Financial Supplement Scheme (SFSS)
  • tax-free threshold and income tax rates
  • leave loading.

It does not take into account the special rates for:

  • actors, variety artists and other entertainers
  • people employed in the shearing industry
  • people seasonally employed in the horticultural industry
  • people employed in the Joint Petroleum Development Area
  • members of the Defence Force
  • the following types of payments
    • employment termination payments (ETPs)
    • lump sum payments in arrears
    • return-to-work payments
    • super income streams
    • super lump sums
    • unused leave payments on termination of employment
    • commission payments
    • non-super income.

Tax tables

You can also use the PAYG withholding tax tables to calculate the amount that should be withheld from your pay. Each table includes instructions, which you must follow carefully to calculate the correct amount of tax.

Which table or tables you will need depends on:

  • whether you are a resident or non-resident for tax purposes (if you are unsure, refer to Work out your tax residency)
  • whether you are employed in a specific industry
  • whether you are receiving certain types of payments to which concessional rates of tax are applied
  • how often you are paid
  • whether you have an accumulated HELP or Financial Supplement debt
  • whether you are entitled to a reduction in the rate of Medicare levy.

For more information on myTax 2019, online tax return 2019, myGov 2019, Tax Return 2019 , or any other tax related matter, please call our professional accountant on 1300 768 284 . For more information please contact us at 1300768284 or you can email us at enquiry@taxrefundonspot.com.au

Deductions Allowed in Income Tax Return Lodgement

The ATO is centred around helping citizens get their deductions right, but at the same time they’re watchful for warnings that distinguish individuals who are doing the wrong thing. Here’s a list of deductions you usually can’t claim on your tax return.

  • Travel between home and work – which is generally considered private travel.
  • Car expenses – unless you are transporting bulky tools or equipment
  • Car expenses – that have been salary sacrificed.
  • Meal expenses – unless you were required to work away from home overnight.
  • Private travel – including any personal travel portion of work-related travel.
  • Everyday clothes – you bought to wear to work
  • The cost of laundering eligible work clothes – unless you can show how you calculated the cost.
  • Higher Education Loan Program – contributions charged through the HELP scheme.
  • Self-education expenses – where there is no direct connection to your current employment.
  • Phone or internet expenses – that relate to private use.
  • Tools and equipment that cost more than $300 – however, you can depreciate the cost over a number of years.

For more information on Etax, myTax ATO, myGov and online tax return, please contact us at 1300 768 284 or you can email us at enquiry@taxrefundonspot.com.au

 

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For more information on Etax, myTax ATO, myGov and online tax return, please contact us at 1300 768 284 or you can email us at enquiry@taxrefundonspot.com.au

State and Territory Payroll Tax Obligations

Payroll tax is a tax on the wages paid by employers. Employers are likely for payroll tax when their total Australian wages exceed a certain level called the ‘exemption threshold’. Exemption thresholds vary between states and territories.

The payroll tax obligations for not-for-profit organizations are the same as for businesses, except in certain situation.

Payroll tax should not be confused with the pay as you go (PAYG) withholding structure. Payroll tax is payable to the related state or territory by an employer, based on the total wages paid to all employees. Wages include salary, allowances, super contributions, fringe benefits, shares and options and certain contractor payments.

Some organizations may be exempt from payroll tax provided specific circumstances are satisfied. These organizations may include religious institutions, public benevolent institutions, public or not-for-profit hospitals, not-for-profit non-government schools and charitable organizations.

For more information on Etax, myTax ATO and online tax return, please contact us at 1300768284 or you can email us at enquiry@taxrefundonspot.com.au

Difference between employees and contractors

An employee works in your business and is part of your business, whereas a contractor is running their own business.

The following table outlines the differences between employees and contractors based on the six factors which need to be considered when determining whether a worker is an employee or contractor.

EmployeeCharacteristics of an employee include the following.ContractorCharacteristics of a contractor include the following.
Ability to sub-contract/delegate: the worker cannot sub-contract/delegate the work – they cannot pay someone else to do the work.Ability to sub-contract/delegate: the worker is free to sub-contract/delegate the work – they can pay someone else to do the work.
Basis of payment: the worker is paid

  • for the time worked
  • a price per item or activity
  • a commission.

 

Basis of payment: the worker is paid for a result achieved based on the quote they provided.
Equipment, tools and other assets:

  • your business provides all or most of the equipment, tools and other assets required to complete the work, or
  • the worker provides all or most of the equipment, tools and other assets required to complete the work, but your business provides them with an allowance or reimburses them for the cost of the equipment, tools and other assets.

 

Equipment, tools and other assets:

  • the worker provides all or most of the equipment, tools and other assets required to complete the work
  • the worker does not receive an allowance or reimbursement for the cost of this equipment, tools and other assets.

 

Commercial risks: the worker takes no commercial risks. Your business is legally responsible for the work performed by the worker and liable for the cost of rectifying any defect in the work.Commercial risks: the worker takes commercial risks, with the worker being legally responsible for their work and liable for the cost of rectifying any defect in their work.
Control over the work: your business has the right to direct the way in which the worker performs their work.Control over the work: the worker has freedom in the way the work is done subject to the specific terms in any contract or agreement.
Independence: the worker is not operating independently from your business. They work within and are considered part of your business.Independence: the worker is operating their own business independently from your business. The worker performs services as specified in their contract or agreement and is free to accept or refuse additional work.

For more information on Etax, Mytax and online tax return, please contact us at 1300768284 or you can email us at enquiry@taxrefundonspot.com.au

 

Check if workers are employees or contractors

It’s important to check whether your workers are employees or contractors, as your tax, super and other government obligations are different depending on whether the working arrangement is employment or contracting.

If you get it wrong and fail to meet your obligations, you risk having to pay penalties and charges.

Engaging a new worker

Before you enter into a work agreement or contract with a worker, you need to check whether the arrangement you’re planning to enter is one of employment or contracting.

You should check every time you engage a new worker, unless the working arrangement is identical to that of another worker which you’ve already checked.

Unless it’s exactly the same working arrangement, including the specific terms and conditions under which the work is performed, there could be a different outcome in relation to whether the worker is an employee or contractor. Minor variations in working arrangements can result in different outcomes.

If you have not checked for existing workers

If you’ve previously engaged a worker without checking our information about whether the arrangement is employment or contracting, you should review your earlier decision now to make sure you got it right.

For example, if you made the decision to treat your worker as a contractor because they have an Australian business number (ABN) or specialist skills or you only need them during busy periods, you need to review this earlier decision now. None of these things will make a worker a contractor. They may instead be an employee.

If you’ve engaged a worker incorrectly (such as engaging them as a contractor when they are an employee) you’ll need to meet the correct tax and super obligations for the worker from their start date, not just from when you identified the mistake.

For more information on Etax, Mytax and online tax return, please contact us at 1300768284 or you can email us at enquiry@taxrefundonspot.com.au